consists three part with 100 points Part I T/F – Please read the question careful and answer T for True and F for False 1.If the unit price of inventory is increasing during a period, a company using the LIFO inventory method will show less gross profit for the period, than if it had used the FIFO inventory method. 2.Under a perpetual inventory system, the cost of goods sold is determined each time a sale occurs. 3.A periodic inventory system does not require a detailed record of inventory items
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Acct 3511 Chapter 8 Concepts – Inventory & Cost of Goods Sold Professor Marco J. Malandra, CPA 1. State 4 characteristics of Inventory & Cost of Goods Sold (CGS)? Is Inventory initially capitalized or expensed? What concept determines when it’s expensed? Inventory: 1) Asset (current) 2) Balance Sheet 3) real 4) debit NAB CGS: 1) Expense 2) Income Statement 3) nominal 4) debit NAB Matching: Any expenses associated with revenue
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Workshop Three: Case Studies Case 6-2: A + B + C) FIFO, LIFO, AND AVERAGE COST METHODS FOR 2005, 2006, 2007: FIFO 2005 COGS 1840 X $20 total= $36,800 600 X $20.25 $12,150 380 X $21 $7,980 2820 X $56,930 2005 inventory 420 X 21 total= $8,820 400 X 21.25 $8,500 200 X 21.5 $4,300 1020 $21,620 LIFO 2005 COGS 200 X 21.5 TOTAL= $4,300 400 X 21.25 $8,500 800 X 21 $16,800 600 X 20.25 $12,150
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6-2 Lewis Corporation* Lewis Corporation had traditionally used the FIFO method of inventory valuation. You are given the information shown in exhibit 1 on transactions during the year affecting Lewis’s inventory account. (The purchases are in sequence during the year. The company uses a periodic inventory method). Exhibit 1 Inventory Transactions 2000-2002--------------------------------------------------- 2000 Beginning Balance 1
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Running head: DISCLOSURE ANALYSIS PAPER Disclosure Analysis Paper Mandy Diaz University of Phoenix Michael Littlejohn ACC422 / Intermediate Financial Accounting II August 23, 2010 Disclose Analysis Paper The consolidated financial statements include the accounts of Wal-Mart Stores, Inc. and its subsidiaries. Significant intercompany transactions have been eliminated in consolidation. Investments in which Wal-Mart has a 40% to 60% voting interest and which Management control are
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6-2 Lewis Corporation* Lewis Corporation had traditionally used the FIFO method of inventory valuation. You are given the information shown in exhibit 1 on transactions during the year affecting Lewis’s inventory account. (The purchases are in sequence during the year. The company uses a periodic inventory method). Exhibit 1 Inventory Transactions 2009-2010--------------------------------------------------- &nbs p;
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d. the FIFO method is used, but not when the weighted average method is used. e. the weighted average method is used, but not when the FIFO method is used. 5. Weighted average and FIFO equivalent units would be the same in a period when: a. no beginning inventory exists. b. no ending inventory exists. c. both a beginning and an ending inventory exist but are not necessarily equal. d. the beginning inventory units equal the ending inventory units. e. Weighted average and FIFO equivalent
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FIFO stands for first-in, first-out which means that the oldest items in the inventory are recorded as being sold first. At the end of the year the items left in inventory are the ones that were most recently placed there. FIFO Advantages The FIFO method is simple to understand as well as to operate. The method makes sense because the products that are made or received first are the first ones to be utilized or sold. FIFO helps to reduce old or outdated inventory by using it first before the
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and 486 for 2002. Changing to LIFO will defer taxes given the current expectations. 3. The effect of remaining on LIFO in this situation is that pre-tax income for 2003 will be higher by $1,915 and, therefore result in higher tax for thie year of $766. That still results in a net deferral from inception. 4. LIFO reserve in 2000 = $1,220. LIFO reserve in 2001= $2,300. The LIFO reserve is the cumulative deferred income due to using LIFO instead of FIFO. The LIFO reserve increased by $1,080 in
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400. There has also been an increase in the net income of the organization. The net income in the year 2011 was at the level of $398167. This increased to the level of $443446 in the year 2012. This shows that, the Solution 8-1 a.1. Assumptions FIFO Inventory Effect Sales (Revenue) 1000 Units @ 90 $90,000 Cost of Sales:
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